HTIL – Indian Cash Use

Post completion the proforma net cash is US$8.4bn with the remaining group providing pro-forma EBITDA of US$650m in 2006. However in 2007, there should be big investments and start-up losses in both Vietnam and Indonesia.

It is almost as if Orascom have nothing to complain about. They asked for a special dividend and have gotten one. In yesterdays Hong Kong Standard there was rumours that Orascom might buy the emerging assets in Sri Lanka, Vietnam and Indonesia.

HTIL also put in perspective the Indian home-run compared to the Hutchison Whampoa previous two telecoms home runs with investment in Orange (UK + Other) and Voicestream(USA).

In terms of Capital Gains:

Orange = HK$168bn

Voicestream = HK$30bn

Hutchison Essar = HK$75bn

My initial speculation that HWL might inject the 3G assets into HTIL have proved to be extremely wide of the mark. I still think this story has some way to run, the next stage being a statement from Orascom on whether they plan on staying in HTIL. If they exit, HWL will have a lot more flexibility. In fact, I think part of the strategy of reminding everyone how brilliant HWL have been with telecoms investments in the past is to prepare people to what might happen with the loss making 3G assets in the future.